Pensions are funded through contributions from employees and employers. The majority of the pension contributions are used immediately to fund the pensions of present pensioners and some are transferred to a pension liability fund to cover future pension liabilities.
Pension contributions are levied from the employee’s earnings for the period that the employee accrues their own pension
- from turning 18 up to the age of 68
- employees aged less than 68 who are on a pension also need to pay pension insurance contributions as pension also accrues on work performed while on a pension.
Employees pay earnings-related pension contributions in 2011 as follows:
- persons under 53 years pay 4.7%
- persons aged 53 and over pay 6.0%
An employer deducts the employee’s pension contribution from his or her gross salary in connection with the payment of the salary and pays it along with the employer contribution to the pension company. The employee can check his or her contribution from the salary certificate or the certificate of taxes withheld.
